Royal Commission questions Dover client protection

Royal-Commission/Kenneth-Hayne/Dover/Terry-McMaster/Mark-Costello/financial-planning/

27 April 2018
| By Mike |
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Just minutes after being warned by Royal Commissioner Kenneth Hayne about the implications of his company’s documents possibly being regarded as “misleading and deceptive” Dover Financial Planning principal, Terry McMaster, collapsed in the witness box and ambulance paramedics were called.

McMaster’s collapse came amid questioning by counsel assisting the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Mark Costello about whether a document, Dover’s Client Protection Policy, used by Dover was intended to protect the company rather than its clients.

McMaster agreed with Costello’s assertion that the document represented “a Dover protection policy” but said it also contained clauses which increased his firm’s liability and cited damages which might flow from a breach of the compliance processes.

McMaster also agreed with Costello that many aspects of the document were unenforceable stating: “I think that could be the case now, yes”.

That response prompted Royal Commissioner Hayne to intervene to suggest to McMaster that the document might itself be “misleading or deceptive” and to caution him about how he answered because it “might draw attention to relevant provisions of the ASIC Act about making misleading or deceptive statements”.

McMaster agreed that the document was likely to be ineffective in the context of the Financial Ombudsman Service (FOS) and added that while the company was aware that some of the subclauses could be struck out, “there would be other circumstances where, in certain situations, there wouldn’t be a striking down”.

Asked by Costello whether Dover’s attitude was to seek the maximum protection it possibly could, McMaster answered “yes”.

Asked if it turned out that some of the provisions in the contract were unlawful, “then so be it, and it was worth trying?” McMaster said: “I think that’s, you know, part of it, yes”.

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